This paper explores the effect of FinTech credit on firms' cost of capital and capital structure. Based on a sample of 3,491 non-financial firms operating in 38 OECD countries during the period 2015-2021, we estimate that the economic effect of FinTech credit is approximately 17% on the cost of debt, and 9.5% on the cost of equity. In terms of cost of capital and capital structure, we observe a smaller yet economically significant reduction by around 5.5% and 3%, respectively. We also find that FinTech credit affects especially firms with stakeholders' oriented corporate governance practices, which operate in countries with higher bank market power and in more innovative industries. Finally, using a Difference-in-Difference model built around the COVID-19 outbreak, our evidence suggests that these effects are robust and hold also in time of crisis when the cost of capital generally increases due to the greater economic uncertainty.

Does FinTech credit affect firms’ cost of capital and capital structure?

Girardone, Claudia;Nieri, Laura;Pisera, Stefano;Santulli, Rosalia
2024-01-01

Abstract

This paper explores the effect of FinTech credit on firms' cost of capital and capital structure. Based on a sample of 3,491 non-financial firms operating in 38 OECD countries during the period 2015-2021, we estimate that the economic effect of FinTech credit is approximately 17% on the cost of debt, and 9.5% on the cost of equity. In terms of cost of capital and capital structure, we observe a smaller yet economically significant reduction by around 5.5% and 3%, respectively. We also find that FinTech credit affects especially firms with stakeholders' oriented corporate governance practices, which operate in countries with higher bank market power and in more innovative industries. Finally, using a Difference-in-Difference model built around the COVID-19 outbreak, our evidence suggests that these effects are robust and hold also in time of crisis when the cost of capital generally increases due to the greater economic uncertainty.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11567/1205078
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